Restaurant Funding Options – Benefits and Pitfalls
Friday, July 2nd, 2010There are many sources in which restaurant owners could turn to in search of restaurant funds. All of these funding methods have both advantages and drawbacks. Therefore, it is up to restaurant owners to evaluate their individual businesses, and determine which funding options best suit them.
Traditional Bank Loan
Explanation
A traditional bank loan is a business loan that a restaurant owner can receive through a bank. The money must be repaid over a certain period of time. Many banks offer business loans to small business owners who meet specific requirements, some of these loans are even backed by the Small Business Administration (SBA).
Benefits
o SBA loans available
o Low interest rates
Pitfalls
o Strict, often hard-to-meet requirements
o Long waiting/processing periods
Restaurant Loan (Merchant Cash Advance)
Explanation
Merchant cash advance providers advance restaurant owners up to $500,000. They utilize credit card factoring, allowing the restaurant owner to repay the advance through a small percentage of his/her business’s future credit card sales.
Benefits
o Up to $500,000 in business funds
o Minimal requirements
o Unsecured
o Excellent credit not required
o Flexible repayment procedure
o Renewable
o 7-10 day funding
Pitfalls
o More expensive than other methods
o Not suitable for restaurant owners who do not process credit card sales
Personal (Family, Friends, Savings, etc.)
Explanation
Money accumulated in savings accounts as well as money borrowed from or donated by friends and family can be used to fund a restaurant.
Benefits
o If taking money from your own savings, it does not have to be paid back
o No stringent requirements
Pitfalls
o May leave you with little to no money for emergencies
o Can potentially ruin and/or strain relationships
If after evaluating your restaurant, you realize that a merchant cash advance is your best option, you can get a free online quote and apply online.
Author: Gaston Castro
Article Source: EzineArticles.com
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